Here’s a remarkable fact about the U.S. economy: Entrepreneurs have started new businesses at a record-breaking pace since the pandemic first started a year and a half ago. Sure, new business applications plummeted in the early months of the Covid-19 pandemic. But by Summer 2020, they’d recovered to historically high levels—and they’ve continued to remain strong in 2021.

Our chart above shows the number of new business applications in the United States going back to 2004. As you can see, after the initial drop at the beginning of the pandemic, applications for new Employer Identification Numbers (EINs) surged to more than 500,000 by July 2020. They’ve remained high ever since. Last month, new business applications numbered more than 400,000.

We’ve highlighted before how more people are quitting their jobs, almost certainly because they believe they can find something better. Some have even decided to start their own business. Between January and June of this year, entrepreneurs started 2.8 million new businesses, 60% more than in the same period in pre-pandemic 2019.

Some of this surge in new business formation can be explained by the more robust financial conditions this time around than previous recessions like 2008. Better financial conditions can affect the rate of new startup activity, especially for new businesses that plan to employ people.

However, I would note that much of the new business formation we’ve seen lately has been concentrated in the non-employer startup category, meaning they don’t plan on hiring any workers. The rapid growth of self-employment activity highlights the increasing importance of gig workers in our modern economy.


This is intended for informational purposes only and should not be used as the primary basis for an investment decision.  Consult an advisor for your personal situation.

Indices mentioned are unmanaged, do not incur fees, and cannot be invested into directly.

Past performance does not guarantee future results.